Investor Presentaiton
6.3
6.4
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial
Services Industry
Tax System
Foreign Exchange
Transactions
Investment in Nigeria
Accounting and
Auditing Requirements
Importation of Goods Exportation of Goods
COVID-19 - Economic
and Fiscal Measures
•
Nigerian Shippers' Council
6.5
Royalty Payments
• Operators in the oil and gas industry including oil service companies
. Operators in the maritime and aviation industries, and
• Licensed operators in the Export Processing and Free Trade Zones.
Remittance of Profits and Repatriation of Capital
The NIPC Act guarantees foreign investors the unrestricted transferability of
dividends or profits (net of tax) attributable to foreign investment in Nigeria and
capital repatriation in the event of liquidation. Dividend payments are subject
to withholding tax at 10% as final tax (7.5% for qualifying recipients in a treaty
country).
There is currently no ceiling on profits distributable as dividends, provided such
distributions are from profits and not capital, and there are no reasonable grounds
for believing that the company is or would be insolvent after the payment.
However, remittance of dividends and interest on foreign loans, or repatriation
of equity or loan capital is subject to foreign exchange inflow at the time of the
investment, evidenced by a certificate of capital importation issued by the receiving
bank.
Remittance of Management and Technical Services Fees
Management or Technical Services Contracts have to be registered with the
NOTAP to qualify for foreign exchange remittance. NOTAP typically disaggregates
Technical Services Assistance and Technical Know-How Agreements, and approves
payment of compensation on per diem and net sales basis, respectively. Payment
for training, installation, etc. is approved by reference to man-day or hourly rates for
short term assignments or Personal Home Remittance.
Based on the NOTAP Guidelines, management fees for management services
approved by NOTAP (other than management of hotels by international hotel chains)
range from 1% to 5% of profit before tax. However, management fee of 1% to 2%
of net sales would apply on projects where profit is not anticipated during the early
years (first three to five years).
Payment of technical service fees and management fees to corporate beneficiaries
is subject to withholding tax at 10%.
6.6
6.7
A maximum fee of 5% of net sales has been fixed for royalties by the NOTAP.
These payments are permissible only where the royalty agreement is registered
with NOTAP. However, royalty payments may be disallowed (for foreign exchange
remittance purpose) where the licensor holds more than 75% of the equity of the
Nigerian company.
Royalty payment is subject to withholding tax at 10% for corporate beneficiaries
(7.5% for qualifying recipients in a treaty country).
Consultancy Fees
Consultancy fees are eligible for direct payment abroad up to a maximum of 5% of
the project cost.
The fees are paid through man day/ man month rates, taking into account the
complexity and the sophistication of the services to be provided. The payment is
typically for projects of very high technology content for which indigenous expertise
is not readily available.
Payment of consultancy fees is subject to withholding tax at 10% for corporate
beneficiaries.
Personal Home Remittance by Expatriates
Expatriates working in Nigeria can remit 100% of their income net of tax as
personal home remittance (PHR). However, an expatriate with accompanying
spouse and resident permit may not be eligible for PHR facility. All foreign nationals
wishing to remit income out of Nigeria are expected to obtain a TCC covering the
amount to be remitted. The TCC will show that the relevant tax has been paid on
the amount or that the amount is not liable to tax.
"The NIPC Act guarantees foreign
investors the unrestricted
transferability of dividends or
profits"
63
Investment in Nigeria Guide - 8th Edition
KPMGView entire presentation